Professor de Vries and alumna van de Ven in the Economists Panel

EU trade deals

The European Union is experiencing large resistance when it comes to concluding trade deals with other countries. The main reason being EU member states demanding too strict requirements over these trade deals. Van de Ven points out that a lack of trade deals will negatively affect the Netherlands, since our country is largely dependent on EU import and export. What’s more, she points out that the Netherlands demands high standards from other countries when it comes to environmental and labour issues. However, we aren’t offering them a fair price for these high standards. Hence, we need to offer countries like India or China a better price for the products we import. Moreover, she points out that some countries are concluding trade deals with China rather than the EU, since China is not demanding these high requirements. Thus, she advocates that we need to focus on what the EU can offer and China not.

Professor de Vries stresses that we must conclude free trade agreements without imposing the demands we make on our own industry on the industry of others. If we require certain standards for certain products, he says, then we should arrange that via mutual standards, not via free trade deals. Additionally, the Professor points out that Free trade agreements from within EU are very difficult. The EU is not a federal state, therefore within the EU it is very difficult to align the interests of all member states. For example, an industry from one of the member states may be adversely affected by a free trade agreement. Still, he emphasizes that there are benefits from more competition. In the end, things get cheaper. There are always adjustment costs, but they are lower than keeping borders closed. Especially if we as a society manage to redistribute wealth to groups who lose from free trade.

Inflation Reduction act

The European Union will counter the United States’ Inflation reduction via subsidizing their own industry as well. De Vries points out that this is imprudent. As a general rule, If one party decides to subsidise a certain industry, it is unwise to subsidise that industry as well. Then it is better to specialise in other areas and save money. Van de Ven notes that subsidising one's own industry is a form of protectionism, and thus goes against free trade.

Will Europe escape a recession?

Th purchasing managers' index (an index on European macro-industry and services industry) has been rising for three months in a row, and therefore seems to indicate that Europe is escaping a recession. However, de Vries states that we are still on the edge of a – all be it small – recession. A lot of effects enter the economy slowly. For instance, a lot of firms are only now experiencing what the high energy bills are like. The same will hold for the high interest rates. He does see a positive note: Namely that the labour market is still functioning adequately, which is due to our ageing population. As a result, the social costs of a recession may not be so bad.

Dutch housing market

The Economic Institute of Construction notes that this year only 70% of the projected houses were built, and that the projection for next year will probably not be met either. Van de Ven explains this by pointing out that for next year, all of the permits were issued 2 years ago already. In the longer term, it will be difficult to build more houses as well. We are already seeing few permits being issued due to nitrogen. Additionally, there is the risk of market players not wanting to build homes if people cannot take out mortgages due to higher interest rates in the future.